Out-Law News 2 min. read

Support from planning system needed to sustain retirement home growth, says expert


Incorporating local need for retirement and 'extra care' homes into the planning system would provide a boost to developers while helping authorities meet their own demographic challenges, an expert has said.

The number of planning applications for new retirement developments increased by 162% between 2010 and 2015 according to figures collated by Pinsent Masons, the law firm behind Out-Law.com. However, this growth may not be sustainable without changes to the planning regime, according to planning law expert Rebecca Warren at the firm.

Under the current rules, many local authorities in England categorise retirement and extra care housing as a 'C3' planning use, which is the same as applies to general housing. Care homes, however, have a separate 'C2' planning class, which means that applications are not subject to the same constraints and burdens as applications for general housing.

Local authorities also do not allocate land specifically for use by retirement and extra care housing, regardless of the needs of the local community. This means that general needs housing developers and specialist retirement providers are in competition for the same land, according to Warren.

Warren said that it would "not be difficult" for the government to amend the Town and Country Planning (Use Classes) Order so as to include a separate class for retirement and extra care housing. The impact of this could be "extensive"; encouraging more developers into the sector and making the promotion of such schemes quicker, she said.

"Local authorities should be required to assess housing need with a separate use class, rather than elderly provision becoming lost in the melee of general housing need figures. The impetus would then be on the local authorities to find sites specifically with the elderly in mind, and this will help alleviate the competition from the general housing market. Private rented sector developers are similarly pushing for their own separate asset class," she said.

"Our population is ageing, and even Brexit won't change that. If we can get the older generation into the right housing and free up the family housing market, this will certainly help with our housing crisis. The government could also look to create incentives for the older population to move, such as reducing or removing stamp duty charges on buyers of specialist elderly housing to lower the cost of moving. A distinct asset class will readily enable the government to identify those qualifying properties where this incentive could apply, which will help reduce the risk of avoidance," she said.

Pinsent Masons based its figures on planning applications made over the past five years by two of the UK's largest providers of retirement housing, Churchill and McCarthy & Stone.

"The retirement market has been growing rapidly, but compared to the US, Australia or New Zealand, we're still way behind in our housing provision for the elderly population," said real estate expert Simon Gardiner of Pinsent Masons.

"It's important that the government realises it can help to keep this market worth investing in, as the business case is there for developers and investors, whilst also helping free up the housing market and providing homes for the ageing population," he said.

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